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Governance and Board issues to note for October





PRA to outline Solvency II senior management requirements for Insurers
The Andrew Bailey City Banquet speech this month contained many useful areas for Boards, and in particular insurance firms to note in respect of the Senior Managers Regime.
Key highlights were:
"...For insurers, we will consult on implementing the fit and proper requirements of Solvency II,
and as the Governor has made clear it is our view that we should align the regimes where that is possible...The key principle is a simple one: there should be a presumption of senior management responsibility."
"In this context senior management means only the very senior executives, and in the PRA’s proposals, only non-executives that are either: the chair; chair of a major board committees; or the senior independent director. There are differences between prudential and conduct in this respect, and our consultation poses the question of how substantial those differences should be. But, is it really unreasonable to expect the most senior figures to assume responsibility?"
"Boards should challenge and this is the role of the NEDS. The executive should view this as a positive help to improving judgements the board is called upon to make and so should provide NEDs with the material to do that, and to do so as concisely as possible."
If you have not had a chance to read it, it's well worth a read. Full speech here...

Treasury Committee publishes Project Verde findings and Co-op investigations rumble on...and on...
The Treasury Committee published its report into the failings of the Co-op last week, blaming senior managers, the regulators and auditors, saying their roles should be examined further, but "by far the biggest responsibility lies with the Co-op Bank leadership." As expected, significant comments are made on the governance of the Co-op and the role of the Board including comments on size, composition, with too many parent company representatives, and lack of financial services knowledge as well as lack of controls. This is unsurprising news. What is disappointing is that the two further separate investigations (FRC and the Independent Enquiry) into the affair continue and the overall lack of joined up cost-saving thinking taking place. Full report here...

The Approved Persons Regime takes a beating too with a call to extend the new Senior Managers Regime, etc across all sectors of financial services. How long before it extends beyond the banking and soon to be consulted-upon Insurance sector, and will there be joined-up thinking?

On the subject of investigations the SFO has launched an investigation into Tesco plc's accounting practices and the FCA has confirmed it will be investigating too.

FRC emphasises reporting areas for Boards 
Following on from last month's revised UK Corporate Governance Code, the Financial Reporting Council has undertaken its Corporate Reporting Review noting that a higher quality of reporting has been found in large companies, but smaller and AIM listed companies are still showing poorer quality accounts. For incorrect accounting it will now also name and shame firms automatically. More here...

New EU Commission confirmed by EU Council
The new EU Commission has been appointed from 1 November for a term of five years. This includes the UK's Lord Hill replacing Michel Garnier as the head of Internal Markets, which includes financial services. Now it's time to wait and see what one of our own makes of everything his predecessor has put in place for the City and beyond.

BIS consults on corporate governance principles for banks
The Bank for International Settlements (BIS) has issued the Basel Committee's consultation paper on revised corporate principles for banks.  The revised principles include:
*risk management oversight and risk culture
*board competency, time given as board members, and board CPD
*nomination processes and remuneration structures
There is much alignment proposed for central banks to the FRC UK Corporate Governance Code. The devil is always in the detail and ultimately it will depend on each banking supervisor to interpret the principles in their jurisdiction. Consultation ends 9 January. Full document

EIOPA consults on product oversight and governance for insurers
This week the European Insurance and Occupational Pensions Authority (EIOPA) has also opened consultation on its 12 guidelines on product oversight and governance arrangements by insurers seeking to align policy across member state supervisors. Consultation ends 23 January. More here...

Sarah Thwaites joins BP&E Global Board
We are delighted to announce that Sarah Thwaites has joined our Board of directors. After a highly successful career spanning regulation, public and private sector, Sarah is an expert on Board Competency and helps individuals and the Board as a whole to stay up to date. More on Sarah here... 


Board-related CPD programmes
Our topical events, designed for Executive and Non-Executive Directors in the financial services sector, provide intensive 2 hour practical briefings that keep leaders up to date on essential topics.

They are ideal for:
• Individual development or induction programmes
• Developing those identified in succession plans
• Addressing particular issues your Board is dealing with

These events can also be run in house for your Board at your convenience for up to 12 people and provide the Board with a forum for discussing the topic in the context of their business. Bespoke events can also be designed to address the challenges your Board faces.

Forthcoming Briefings - dates for your 2015 diary
Managing Conduct Risk in the Lloyd's Wholesale Market - 22 January *booking now*
The Effective Audit Committee - 5 February
Better Board Evaluations - 26 February
Improving Board Reporting and MI - 12 March
Responsibilities of Approved Persons in Governance Roles - 26 March
The Role of the Board in Creating and Leading Culture - 16 April
Preparing for PRA Visits - 30 April am
Preparing for FCA Visits - 30 April pm
Conflicts of Interest - recognising and managing conflicts at Board level - 14 May
Using Behavioural Risk to Add Value - 4 June am
Beyond the Risk Register - 4 June pm
Creating Effective Governance Structures - 18 June
Managing Unconscious Bias in the Boardroom - 9 July

Board development
Award-winning BP&E Global's Board-ready Leadership Programme - starts next Spring (5 days over 3 months) More here...  Also available in-house as a programme or separate modules.

Until next time...

Kind regards

Judy Delaforce
Managing Director
BP&E Global Ltd - Board Performance Matters
020 7764 0721

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